Could CBDCs impose themselves on international financial transactions to the point of revolutionizing them? Many analysts tend to think so. Some trends seem to prove them right. Some countries have already launched their central bank digital currencies while others are working on it. This is despite the warnings of cryptocurrency purists, who believe that CBDCs go against the original principle behind the digital currency.
A potential capable of transforming the financial system
Central Bank Digital Currency (CBDC) could disrupt the way the world’s financial system currently operates, according to a study released Tuesday, Jan. 17 by Bank of America. Just as the monetary system has gradually replaced the barter system since 6And century BC, the American financial institution believes that CBDCs are the natural evolution of fiat currency and Terms of payment.
“CBDCs don’t change the definition of money, but they will likely change how and when value is transferred over the next 15 years,” say the analysts of the 2And largest US bank in 2021, after JP Morgan Chase.
The conclusions of these experts are based on the fact that to limit costs and increase their efficiency, CBDCs use blockchain technology. This has “the potential to revolutionize global financial systems”. As a result, they could, the report points out, “constitute the most important technological advance in the history of money”.
Recent developments in the cryptocurrency market comfort analysts
The adoption of CBDCs has seen a remarkable evolution recently. In October 2022, Nigeria launched, through its central bank, e-naira, becoming the first country to adopt a central bank cryptocurrency in Africa. A similar trend can be observed in Asia with the Chinese e-yuan, which launched in early January.
Europe is no different when it comes to adopting central bank cryptocurrencies. Countries like Ukraine are actively working to make it their currency. After implementing a legal arsenal on digital assets in 2022, the country aims to host the first international body for the CBDC.
Despite this certain enthusiasm, several analysts point to the risks. Threats that can be mitigated if CBDC adoption is driven by payment method efficiency and financial inclusion.
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Far from dampening my enthusiasm, a failed investment in a cryptocurrency in 2017 only increased my enthusiasm. I therefore decided to study and understand the blockchain and its multiple uses and to convey information related to this ecosystem with my pen.